President Joe Biden has recently announced new tariffs on Chinese products, including Electric Vehicles (EVs). However, Chinese companies may avoid these tariffs by rerouting their production through other countries.
In his announcement, Biden stated that the new tariffs would apply to a variety of Chinese products such as steel, aluminum, semiconductors, EVs, batteries, critical minerals, solar cells, and medical products. Specifically concerning EVs, Biden plans to impose over 100 percent tariffs on China-made EVs in order to protect American auto workers from an influx of Chinese cars flooding the market.
Some Chinese companies, like BYD, have already begun exploring ways to evade these tariffs. BYD, a premier automaker in China, is considering opening a factory in Mexico to produce their EVs. By selling these cars in the US market through Mexico, they could potentially avoid facing significant tariffs.
Although BYD executives claim they are not interested in entering the US market, U.S. Trade Representative Katherine Tai has suggested that the administration is looking into imposing tariffs on products coming from Mexico. This comes as Mexico has become the largest source of imports to the U.S., surpassing China.
Various organizations, such as the Alliance for American Manufacturing and the Coalition for Prosperous America, have expressed support for the new tariffs as a way to protect American workers and manufacturing from unfair trade practices by China. In the past, Chinese companies have rerouted their production through other countries to avoid tariffs, such as with solar panels being processed in Cambodia, Malaysia, Thailand, and Vietnam.
Biden’s administration has also revoked tariff waivers for Chinese solar companies that were circumventing U.S. tariffs by processing their products through Southeast Asia. The latest round of tariffs will now target those Chinese companies that had previously received waivers but continue to avoid tariffs through rerouting their production.
